Monday, February 13, 2012

Andrew Hacker - We’re More Unequal Than You Think

From The New York Review of Books, this is an interesting article/review featuring several recent books on the science of mind, politics, and social reform.
The Spirit Level: Why Greater Equality Makes Societies Stronger
by Richard Wilkinson and Kate Pickett
Bloomsbury, 331 pp., $28.00; $18.00 (paper)
                                               
The Darwin Economy: Liberty, Competition, and the Common Good
by Robert H. Frank
Princeton University Press, 240 pp., $26.95
                                               
The Age of Austerity: How Scarcity Will Remake American Politics
by Thomas Byrne Edsall
Doubleday, 272 pp., $24.95
                                                 
Why Some Politicians Are More Dangerous Than Others
by James Gilligan
Polity, 229 pp., $19.95
                                                 
hacker_1-022312.jpg
Cary Grant as Johnny Case, a self-made man, at his rich fiancée’s house with her brother Ned (Lew Ayres) and the butler (Thomas Braidon), in George Cukor’s Holiday, 1938 

Imagine a giant vacuum cleaner looming over America’s economy, drawing dollars from its bottom to its upper tiers. Using US Census reports, I estimate that since 1985, the lower 60 percent of households have lost $4 trillion, most of which has ascended to the top 5 percent, including a growing tier now taking in $1 million or more each year.1 Some of our founders foresaw this happening. “Society naturally divides itself,” Alexander Hamilton wrote in The Federalist, “into the very few and the many.” His coauthor, James Madison, identified the cause. “Unequal faculties of acquiring property,” he said, inhere in every human grouping. If affluence results from inner aptitudes, it might seem futile to try reining in the rich.

All four of the books under review reject Hamilton and Madison’s premises. All are informative, original, and offer unusual insights. None accepts that social divisions are inevitable or natural, and all make coherent arguments in favor of less inequality, supported by persuasive statistics.

1.

The Spirit Level is a prodigious empirical effort directed to a moral purpose. It ranks the quality of life in twenty-three countries, mainly European, but with Singapore, Israel, and the United States also on the list. To evaluate the well-being of each society, Richard Wilkinson and Kate Pickett use indices ranging from obesity and incarceration rates to teenage births and the feelings people have about their fellow countrymen. They then relate these variables to how income is distributed in each society. Here they deploy the Gini ratio, a three-digit coefficient purporting to measure the extent of income inequality within any grouping for which figures are available. Their national Gini scores range from .230 in egalitarian Sweden to .478 in highly stratified Singapore, with the United States second highest at .450. Linking social indicators to economic disparities, the authors conclude that “reducing inequality is the best way of improving the quality of the social environment.”

As income gaps grow, they write, it’s not only the poor who suffer. Unequal societies not only bear “diseases of poverty,” but also “diseases of affluence.” The latter include cancer and cardiovascular disease as well as the afflictions of well-off people who are “anxiety-ridden,” “prone to depression,” and “seek comfort in overeating, obsessive shopping and spending.” At this point, as elsewhere, the authors tend to get carried away. I’m not sure I’m ready to rank compulsive spending or eating too much as diseases. Even so, Wilkinson and Pickett are blunt in their summary: “inequality is socially corrosive.” What’s missing in their analysis is how far, if at all, income disparities may also degrade the deprived.

The authors don’t go so far as to say that people with above-average incomes would end up better off were they to take home less money, and if greater numbers of their poor compatriots had more. But they do contend that “the benefits of greater equality seem to be shared across the vast majority of the population.” Thus one of their tables shows that those in the middle class in more egalitarian England have lower rates of cancer and diabetes than their counterparts in the United States. American children don’t perform as well academically as their peers in Finland and Belgium, where incomes are not as widely spread.

The broader argument was made by Oliver Wendell Holmes, who reputedly told one of his clerks that taxation is how we “buy civilization.” Lower Gini scores generally tell us that the business and professional classes of such countries as Norway and Denmark consent to higher tax rates because publicly provided higher education and health care and cultural amenities make for a more congenial society, in which everyone shares.

Wilkinson and Pickett teach at Britain’s University of York, and they aim for an international audience. Yet they seem to have America mainly in mind when they remark that “instead of a better society, the only thing almost everyone strives for is to better their own position.” Here too we’re into hyperbole. The United States has a large stratum of professionals who choose public service careers; indeed much, even most, of the middle class doesn’t set its sights on more than routine personal advancement. Still, it’s appropriate to ask how many of the rich care about creating a “better society.” Wealth brings higher-quality health care, private schooling, and personal pension plans, along with shielding from lines, crowds, and captious service.

Like many modern studies, most of the findings in The Spirit Level derive from statistical formulations. I found myself wanting to know more about the actual people represented by indicators and indices. In Belgium, taxes take 42 percent of an average worker’s earnings, compared with 23 percent in the United States; in Denmark, personal income taxes absorb 27 percent of its gross domestic product, against 8 percent in the US. How do their middle-class professionals balance the public and private in their conceptions of the good life? Do they, for example, feel that high take-home pay is needed to bring out people’s best efforts? “We see no indication,” Wilkinson and Pickett say, “that standards of intellectual, artistic or sporting achievement are lower in the more equal societies.” And as a measure of innovation, they show that such countries file more patents per capita. But they don’t consider keenly competitive enterprises—such as Apple and Facebook—from which Forbes 400 fortunes grow. We hear it claimed that innovations such as iPhones and iPads are much encouraged by hopes of inordinate wealth. Is there an egalitarian alternative?

There’s a limitation to the Gini ratio that the authors don’t mention. Because Spain (.320) and Canada (.321) are so close in Gini ratio, The Spirit Level would have us conclude they have comparable levels of income. But similar scores can conceal quite different distributions of income. Unfortunately, Wilkinson and Pickett don’t explain why. For example, the Gini ratios for New Hampshire (.425) and Iowa (.427) make them relatively egalitarian on the American spectrum. However, New Hampshire gets there by having the same number of high- and low-income households: 26 percent have annual income over $100,000 with 26 percent under $35,000. Iowa has almost the same ratio, but only 15 percent of its households make above $100,000 and 36 percent fall below $35,000. The Spirit Level‘s message is that if countries want a more equable and equitable society, they should move toward closing their income gaps. But what can we say about Iowa’s equality if it still has a substantial low-income segment? Reducing the proportion of the rich may be a pyrrhic victory if poverty persists.

Read the whole article.
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